Introduction
The Bitcoin protocol known as the legacy needed an upgrade that could possibly fit more transactions in a block, was cheaper and prevented transaction malleability. In this article we will be having a look at what SegWit means and is, how it functions, what it does, the format of the addresses, whether it was a good idea and if it was an upgrade from the legacy protocol, the advantages and disadvantages it has and finally what SegWit2x is.
What is SegWit? And How Does SegWit Work?
SegWit is short for Segregated Witness (Consensus Layer) and was first introduced in 2015. This technology was an update for the Bitcoin protocol, it is a soft fork of the main Bitcoin network. Its main focus and goal is to prevent transaction malleability and increase block capacity. Bitcoin was actually not the first cryptocurrency to use SegWit, it in fact was Litecoin. For an analysis of bitcoin ( تحلیل بیت کوین ) click here.
SegWit, segregates a transaction in to two parts, which decreases the weight of it and therefore increases the number of transactions in a block without changing the size of the block.
Sender and receiver wallet addresses are in the first section of a transaction and witness data that has the transaction signatures in it are in the second section. By removing the witness data from the dominant blockchain SegWit decreases the size of a transaction making it need less space and hence making the Bitcoin network have more room.
Another important fact to point out is how SegWit prevents transaction malleability. A transaction hash can and will completely change if just one character of the digital signature changes, since SegWit removes the digital signature of a transaction therefore there is no way the ID can change, problem solved. So, if you are wondering “Is SegWit secure?” the answer is yes because it puts a stop to transaction malleability.
On a last note, users that were not and are not on board with this upgrade can still use legacy transactions and take part in the Bitcoin network.
SegWit Address Format
There are two address formats that are used, which make it easy to figure out if a user is using a crypto wallet ( کیف پول ارز دیجیتال) that supports SegWit or sending from a SegWit address.
Pay to Script Hash or P2SH addresses start with a 3, they are quite older and are supported on both legacy and SegWit transactions. Another note to point out is that even if a wallet doesn’t support SegWit it can still receive transactions with this address type. And finally, the fees are a bit lower than normal legacy transactions.
The other address format starts with bc1 and is called Bech32 (aka native SegWit address). This type of address format can only work with wallets that support SegWit, it uses less data than P2SH which makes blocks have more transaction capacity and therefore much lower transaction fees.
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Was SegWit a Good Idea?
Many in Bitcoin cryptocurrency community believe that SegWit is not the solution they have been waiting for and rather temporary fix for it.
This is the reason many resisted it and why a hard fork was developed, Bitcoin Cash, a network with a larger block size than the original Bitcoin network.
However, miners, nodes and the blockchain all benefit from lower transaction fees and faster transactions and it also made way for Taproot to be developed which is an upgrade to Bitcoin and lets transactions happen even faster.
Pros and Cons of SegWit
The benefits SegWit have include, more transactions in a block, lower transactions and faster ones. It also prevents transaction malleability.
The drawback of SegWit is the fact that not everybody supports these type of transactions.
What is SegWit2x?
Digital Currency Group proposed SegWit2x in May 2017, with a 2MB block size and an 80% bitcoin hash rate support. However, the agreement for SegWit was to avoid the risk of a hard fork which led the developers of SegWit2x to announce that the launch was cancelled due to miners not supporting it.
Conclusion
In conclusion we now know what SegWit is, what is does, how it works, that fact that it has two address formats and although many people aren’t on board with it, it is a good idea. We also found out that Segwit2x was never launched and was only proposed.
